Lyft Dodges a Bullet, but Uber May Not Be So Lucky


After reaching a settlement, Lyft will not have to change their drivers to employees as it has agreed to pay out an extra $12.25 million in compensation and benefits. There are similar lawsuits that Uber will face from its drivers however a twist in litigation could see the outcome being far worse.

When challenging their status as independent contractors, Lyft’s drivers could not bring a case against the app company because of a clause in their contracts, due to this drivers have settled for the promise of partial reimbursement for some of their expenses and that they would warn them if they were to be laid off due to poor customer feedback.

Shannon Liss-Riordan, the attorney that represented both Lyft and Uber drivers stated that drivers were not able to achieve global changes at Lyft but this would be possible at Uber.  The court held the clause in Uber’s contract with the drivers was seen as unenforceable and in recent hearings Judge Edward Chen has dealt a number of setbacks to Uber as he scolded the company’s attempts to avoid facing the complaints made by its drivers.

Those drivers that are involved in the lawsuit are looking to be reclassified as full time employees of Uber and not independent contractors. Their argument is that Uber controls important areas of their work, like their wages, who can and cannot work on the platform and who is entitled to certain benefits and protection. Uber on the other hand argues that this will change the nature of their business and increase the cost of doing business dramatically, also arguing that most drivers prefer Uber because of the flexibility offered.

How much will Uber pay?

The lawsuit is set to go to trial in federal court and there are a number of parties that will be watching closely for the outcome. Liss-Riordan estimates that Lyft drivers received just one fifth of what they could have won if they had gone to trial, this doesn’t mean that Uber could have to pay its drivers $61.25 million to settle. It has been made perfectly clear that the case is not so much about financial recompense as it is about redefinition of how the on demand economy operates.

In the litigation against Uber the lawyers are hearing daily complaints from drivers because Uber are mistreated them by cutting their fares, shortchanging them on pay owed and deactivating them for no reason. Liss-Riordan stated that whilst the difference doesn’t discuss whether either company have rightly or wrongly classified their drivers as independent contractors instead of employees, it binds the belief that far more Uber drivers than Lyft drivers are anxious for the lawyers to continuing these claims against Uber.